Wednesday, January 28, 2009

Concord leaders cut $4 million from budget, take from reserves to stay above water

By Tanya Rose

STAFF WRITER

CONCORD — Waning retail sales and property taxes have dug a $7.2 million hole in the revenue Concord leaders expected when they approved the city budget this summer.

On Thursday night, the City Council decided $1.4 million more out of reserves than originally planned, bringing the total reserve spending to $3.2 million for the year. This is the first time the city has had to use its reserves since the 1990s.

City Manager Dan Keen proposed an additional $4 million in cuts, through eliminating jobs that have been vacant and some city programs.

"Folks, it's not just raining, it's pouring," said Mayor Laura Hoffmeister. "But it will get better. Hang in there."

The council also agreed to eliminate a requirement that the reserves always be at 30 percent of the general fund — about $24 million of the $80 million budget. While the city grapples with the economy and tries to get back on track financially during the next few years, leaders will allow reserves to sink to 15 percent, or about $12 million. But Keen said the reserves should be back to 30 percent by about 2017.

If the city were to require a 30 percent reserve at all times, the cuts required to balance the city's budget, Keen said, would be drastic. He argued that is unnecessary.

"Fifteen percent is very healthy, but it's also as low as I'd recommend for a city this size," Keen said.

Councilwoman Helen Allen said that if Advertisementstate legislators in Sacramento look to cities to balance its budget later on, Concord may have no choice but to ask residents to vote on a tax.

"We're not there yet — I'm not saying this will happen soon or that it would even happen," she said. " But down the road, you never know."

City leaders credit Concord's 10-year budgeting forecasts for keeping the city of 120,000 out of a more dire situation.

"Other cities are declaring bankruptcy," Hoffmeister said. "We're not in that boat."



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